China’s Central Bank has scheduled another cut in reserves of bank’s requirement ratios by half of 1% starting a week from today with the aim of lowering the real cost of finance to support the economy and will have the effect of releasing an additional 900 billion Yuan in liquidities. It will be the third cut this year with more expected, possibly in October and November or December, according to Li Wei, Senior Economist with Standard Charter China. The move is being made to provide more support to businesses and SME’s. Insiders believe the move reflects the central banks determination to energize private firms by making it possible for them to borrow money and make credit even cheaper for private firms. The market is expecting the US Federal Reserve to cut its interest rates this month and this will give more room for the PBOC to adjust its monetary policies.
Source: Money Talks, ICS